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Supply Chain News: The Top Distribution Center Metrics for 2016

 

Dr. Karl Manrodt and Company Identify the Top Dozen Once Again; Surprisingly, Primary Strategies Don't Much Impact Metrics or Performance

May 31, 2016
SCDigest Editorial Staff

Dr. Karl Manrodt and the Warehouse Education and Research Council (WERC) are back with the annual "DC Metrics" report, first launched all the way back in 2003.

Here, we cover highlights of the presentation summarizing this year’s study, recently delivered at the WERC 2016 annual conference in Providence, RI.

Supply Chain Digest Says...

Once again, Manrodt says that regardless of which strategy respondents indicatedtheir companies were pursuing, not only did they use the same metrics, their performance on the metrics were about the same too.

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Manrodt, who has been a co-author of the report since the beginning, has recently switched teams, if you will, moving Georgia College and State University a couple of years ago. He was assisted once again in the 2016 report by Dr. Donnie Williams, also of Georgia College, and Joseph Tillman, founder of TSquared Logistics.

The report covers a wide range of results across many different metric areas. It is based on survey responses from several hundred logistics professionals.

One of the most popular sections each year is a list of the 12 most commonly used metrics for DC performance, provided below for 2016 along with the changes from the previous three years.


Top DC Metrics Used 2016 vs Prior Years

 

Metric 2016 Rank 2015 2014 2013
On-Time Shipments 1 1 1 1
Average Warehouse Capacity Used 2 6 8 9
Order Picking Accuracy 3 5 5 5
Dock to Stock Cycle Time 4 3 4 4
Internal Order Cycle Time 5 2 2 2
Percent of Supplier Orders Received Damage Free 6 10 7 8
Peak Warehouse Capacity Used 7 7 9 12
Lines Picked and Shipped per Person Hour 8 11 6 6
Total Order Cycle Time 9 4 3 3
Order Fill Rate 10 - - -
Lines Received and Putaway per Hour 11 12 10 11
On-Time Ready to Ship 12 - - -


SCDigest once again recommends that next year the survey should distinguish between a metric for on-time shipments and another for on-time delivery. These are two very different things, as many companies have learned when moving from a focus on on-time shipping to on-time delivery, and it would be interesting to see how many companies are using the more challenging metric - and what that performance is.

Presented at the conference session was a look at the performance of respondent companies across four key metrics. The results, as usual in this report, are organized quintiles of performance, as shown in the chart below. That means , for example, that the "major opportunity" column has the average scores for each metric for the lowest twenty percent of performers.


(Article Continues Below)

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Median scores across all respondents are shown in the far right column.

 

WERC 2016 DC Metrics Study Performance by Quinitile for Four Key Measures

 


The study once again awhile looks at the numbers in part based on what companies say is their primary strategic differentiation: low cost focus, customer service focus, product differentiation focus, or trying to excel at all of these things.

This dates back to a very poplar 1997 book titled "The Discipline of Market Leaders," by Michael Treacy and Fred Wiersema, which argued the most successful companies only put a primary focus on one of those three main areas (cost, service, or product), and while such companies had to be good in the other two areas, they did not have to be great at them.

Once again, Manrodt says that regardless of which strategy respondents indicatedtheir companies were pursuing, not only did they use the same metrics, their performance on the metrics were about the same too.

In other words, the companies saying they were customer service focused didn't score really any better on customer-service focused metrics that did companies that said they were cost focused.

Now go figure that one.

"Companies are not differentiating themselves according to their performance on the basis of the metrics they utilize to evaluate their operations or compare themselves with others in the industry," Manrodt said.

In past years, WERC members were able to access a free copy of the full report. That has changed this year, with only a summary document available to WERC member, and the full data report available at a member cost of $150.00, $300.00 for non-members.

Companies which participated in the survey also received a copy of the report.

Anything you think should be in the top 12 DC metrics list that isn't? Are you surprised there isn't much difference between metrics or performance based on company strategy? Let us know your thoughts at the Feedback section below.

 

Your Comments/Feedback

Steve Murray

Lead Auditor and Senior Research Analyst, WERC
Posted on: Jul, 04 2016
Regarding your recommendation for separating on time shipment and delivery, the Study has included both for many years now.  On time shipments is considered to be a DC internal metric - something which can be controlled internal to the warehouse operations.  On Time Delivery is a part of the Perfect Order metric set, and the difficulties with capturing and analysing this metric have been well described in the earlier issues of the Study. State of the art systems with digital proof of delivery from carriers helps, but then there is the customer's definition of what "On Time" means to them.

Thanks as always for being there and providing valuable analysis and feedback.

 

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